Long-term effects of extended unemployment benefits for older workers

This paper examines the long-term effects of extended unemployment benefits that older unemployed can receive until retirement in Finland. We consider a reform that increased the age threshold of this scheme from 55 to 57. Our estimates show that the reform increased employment over the remaining working career by seven months. Despite the corresponding reduction in unemployment, we find no evidence of significant effects on mortality or receipt of disability and sickness benefits, nor on spouse’s labor supply. The reform led to a fiscal impact of 15,000 Euros in increased net transfers paid by an average individual over the 10-year period.peerReviewe